Reaping the Benefits of Contract Farming in Nepal

Although 80 percent of Nepalese households work in agriculture, the majority of farmers are engaged in farming for home consumption but do not have enough, or the right, produce to sell in the market. In order to transition to commercial farming, poor farmers need support in accessing quality seeds; training in market standards and the proper handling of crops; and in getting their crops to the market. In order to increase exports and respond to the global market, buyers need to be confident they will have a steady supply of high quality crops. USAID Nepal Economic Agriculture and Trade (NEAT) Activity, recognized that in order to foster economic growth and competitiveness of Nepal's high value agricultural products in regional and international markets, constraints at every level must be addressed. NEAT is building capacity of farmers and firms, strengthening market linkages, increasing access to finance in the agriculture sector, and enhancing the business enabling environment through policy reform. One USAID activity that is expected to have long term impact on agricultural export competitiveness is supporting the Government of Nepal as they draft a new Agribusiness Promotion Act, which includes a legal framework for contract farming. In addition, with USAID support, Annapurna Organic Agriculture Industries constructed the first ginger processing plant in Nepal. To guarantee supply for the factory, Annapurna Organic contracted to purchase ginger from approximately 3,000 farmers in western Nepal.